Sunday, November 13, 2016

Buyers Ask: How did the seller come up with the price?

A very common question I seem to get regularly from buyers is "how did you come up with the price?". That's a very good question.

I don't come up with a price, my sellers do. A listing agent advises, the client decides.

What we do at The B&B Team is a very thorough assessment of the profit and loss statements, tax returns, and occupancy. We analyze the business that exists within the piece of real estate, not just the real estate (like the residential market). And then we back into a price that's defensible and financeable. We advise our clients of this price range, and they ultimately decide.

Do we ever list a property at a price well above the range we've suggested to a seller? SURE! And there are often legitimate reasons for doing so.

Is the property more marketable than another with similar net operating income? Is it in an ideal location? Does it have detached and private owner's quarters? Does it have larger than typical owner's quarters? Is there still room to increase revenue and occupancy? (thus leaving room for a buyer to grow the business), does it have an ideal lot for tented wedding and events? Does it have more than adequate parking? Is it within walking distance to town, yet on a desirable residential street? Does it have remarkable or historic features that buyers and guests are drawn to? Does it have really fabulous outdoor space for you and your guests to enjoy? Does it have a killer ocean view? Or a killer kitchen? Does it check off all the boxes on your list?

The point I'm trying to make is that we always start with a valuation of the numbers, because that's an important part what you are looking for in this lifestyle business. Are there sometimes reasons why you'd be willing to pay more? The answer to that is also SURE! You'll understand as you start to look at inns.

When we represent buyers and sellers, we know the numbers, we know Maine and its tourism industry. And we know how to help you evaluate everything that you'll need to in order to make an informed decision.